Wednesday, 11 April 2018

If a cryptocurrency platform approached your company with
an offer to begin paying employees through their platform, would you do it? It
turns out that the practice is gaining momentum. Companies are gradually
warming up to the idea of paying their employees, either fully or partially,
with cryptocurrencies like Bitcoin and Litecoin.

Cryptocurrencies are nothing new. They have been around
for nearly a decade now, but it was only recently that they started gaining
prominence as an investment product and a way to complete international
transactions faster and more securely. And as the world warms up to
cryptocurrencies as an alternative to hard cash, banks and investment firms are
warming up as well.

As for employers, they are beginning to see
cryptocurrencies as a way to attract millennial talent. As long as workers
receive every penny they are due, whether that means actual currency or a
digital currency equivalent, the government is okay with cryptocurrencies as
well. So this takes us back to the original question: would you bring your
company into the cryptocurrency age if given the opportunity to do so?

Cryptocurrencies as an Investment

Though there are a small number of tech workers more than
happy to receive 100% of their pay as cryptocurrency, the vast majority of
workers who accept cryptocurrency only take a percentage of their pay as
crypto. The rest is traditional U.S. currency. This is more an investment
strategy than anything else.

Let's say a worker takes 5% of his weekly earnings as
cryptocurrency. That money can remain in the worker's account as crypto
indefinitely. The worker can convert the funds into other cryptocurrencies or,
as necessary, U.S. dollars. However, the point is to let the funds accumulate
and increase in value over many years – just like any other investment.

Unlike traditional currencies, cryptocurrencies rise and
fall in value based on their popularity as investments. So while the value of
the U.S. dollar may increase just a few percentage points over five or 10
years, a cryptocurrency can easily double or triple in short order. Such is the
appeal of being paid in crypto.

Tech-savvy workers who can spare some of what they earn
are agreeing to be paid that amount in cryptocurrency as an investment. They
are letting the cryptocurrency sit and grow. The hope is that they will have
thousands of times more than they originally earned when they are finally ready
to convert their cryptocurrencies into dollars.

Volatility Is Always a Concern

So, why hasn't cryptocurrency caught on as a primary
payment method if it has so much potential? BenefitMall, an online payroll services provider,
says the reason can be described by a single word: volatility. All investments
are volatile to a certain point, but cryptocurrencies are extremely volatile
due to their immature state.

A cryptocurrency like Bitcoin can gain several hundred
dollars in value in a single day, then lose twice that much in an hour's time.
That's because the value of said currencies is not tied to anything concrete,
the way U.S. dollars are tied to the federal reserve. The value of
cryptocurrencies relies entirely on the number of people who want it versus the
total number of coins available. It is a pure supply and demand investment.

Volatility is the main reason people willing to accept
cryptocurrency as wages only accept a small portion of their pay this way. They
are willing to bet a small amount in crypto with the expectation that it will
pay off in the future. In the here and now though, they still need U.S. dollars
to pay the bills.